Mexican Parties Approve Bank Bailout

December 13, 1998|BY JULIA PRESTON The New York Times

MEXICO CITY — After nine months of debate that strained Mexico's maturing democracy and threatened to destabilize the financial system, the government and a major opposition party have agreed on reorganizing a $61 billion bank bailout that had become an example to taxpayers of spectacular corruption favoring the wealthy.

The bailout discussion utterly dominated Mexican politics this year, becoming the first opportunity for opposition parties voted into new positions of power in 1997 to question the government's past economic performance, and force it to admit errors and change its ways.

The National Action Party, or PAN, a conservative opposition group, decided to accept an eleventh-hour resolution with the government to signal to Mexican bankers and debtors and international investors that the group will not push partisan politics at the expense of the nation's financial well-being.

The opposition party reached the bailout deal late Friday with the government's party, the Institutional Revolutionary Party, or PRI. The proposal was immediately voted out of a congressional committee and was expected to be approved by the full lower house of the Congress later Saturday. Approval by the Senate is pro-forma because the PRI holds a majority there.

The complex legislation sets up a new agency that will absorb roughly $36 billion of the debts carried by the current bailout program, known as the Bank Fund for Savings Protection.